Date: 2026-04-28 Quarter: Q4 FY25 (Dec 2025) — refresh, not new print Prior thesis: Strengthening (Q4 FY25 review, Feb 25) Updated thesis: Strengthening — and now valuation finally cooperates
The thesis got stronger and the price got cheaper. That is the setup I sit on my hands for. Stock down ~33% in 90 days from ~700to 403 with zero company-specific bad news. Axon Week (Apr 7-10) delivered exactly what the 2028 model needed: Axon Vision (real-time AI on live video), CJIS-compliant Axon Assistant rolled across the ecosystem, Axon 911 cloud EOC infrastructure shipping. EV/TTM Rev compressed from ~14x at print to ~11.7x. FY26 EV/Rev ~9.0x. For a company growing 33%+, FCB $14.4B (+43%), NRR 125%, 25.5% EBITDA, 2028 line-of-sight to $6B/28% — this is the cleanest entry the market has given me on AXON since the Prepared deal. I am adding to equity. The LEAPS stay put.
Nothing in the fundamentals. Two things in the world.
| Launch | What | My read |
|---|---|---|
| Axon Vision | Real-time AI on live video — object/event detection, threat awareness | The ecosystem moat extending into the live operations layer. Body camera + ALPR + Fusus all feeding one AI inference layer. |
| Axon Assistant — expanded | CJIS-compliant, rolled across full ecosystem (not just officer-facing) | Compliance was the unlock for federal / state agency adoption. 500 customers in year one was small ball — this is the scale-up. |
| Axon 911 | Cloud EOC infrastructure — Carbyne stack now under Axon brand | The 911 product I bought the Jan'28 LEAPS for is shipping. On schedule. |
→ Everything Rick Smith promised on the Q4 call landed. No slippage. The "responsible AI as competitive superpower" framing from the Q4 letter now has product behind it. Underpromise / overdeliver intact.
| At Print (Feb 24) | Today (Apr 28) | Change | |
|---|---|---|---|
| Price | ~$700 | ~$403 | -42% |
| Market Cap | ~$57.5B | ~$32.4B | -44% |
| EV/TTM Rev | ~14x | ~11.7x | -16% |
| EV/Fwd Rev (FY26 mid) | ~10.4x | ~9.0x | -13% |
| Run-rate P/S (Q4×4) | ~18x | ~10.2x | -43% |
Note the gap between price (-42%) and multiple (-16%). The rest came from earnings/run-rate growth catching up under the price. Time has done a lot of the rerating; this is not solely sentiment.
No company-specific bad news during the window. Bookings, ARR, NRR all improved. TD Cowen reiterated Buy with $825 PT on April 15 — calls it multiple compression, not thesis break. 16-analyst consensus Strong Buy, avg PT $758. I agree with the framing.
| Component | Feb 25 sizing | Today sizing (price impact) | Action |
|---|---|---|---|
| Equity (common) | 6.1% | ~3.6% (-42%) | Add to ~7% |
| LEAPS Jan'28 $440C | 6.3% | ~2-3% (deep OTM hurts) | Hold — do not roll yet |
| Total exposure | ~12.4% | ~5.6-6.6% (compressed) | Re-build to ~10-11% via equity adds |
The LEAPS are the painful part. Strike $440, spot $403 — they're $37 OTM with ~21 months to expiry. They're not dead. Implied vol on AXON has expanded with the drawdown so the optionality is still meaningful. But I bought them when the stock was over the strike and now I'm wishing I'd sized smaller. I will not roll them down — that's locking in a loss to chase delta. I'll let them work or expire. Lesson logged: when the LEAPS strike sits 10-15% above spot, I should size at half.
The equity is where I add. At 11.7x EV/TTM Rev for 33% growth and accelerating ARR, this is below the band I'd pay for a top-quintile compounder. Adding 3-4% to equity gets total exposure back to ~10-11%, which is appropriate for the conviction level given the LEAPS are now lower-delta optionality.
Naming it directly so I'm honest with myself:
Per references/decision-spec.md:
| Rule | Status |
|---|---|
| Revenue trajectory accelerating? | Yes — Q4 FY25 +38.5% broke the band; FY26 guide implies 27-30% on a higher base |
| Leading indicators diverging up? | Yes — FCB +43%, ARR +35%, NRR 125% (record), bookings +46% |
| Growth deceleration 2 quarters? | No — Q4 reaccelerated |
| Management credibility? | Strong — beat-and-raise 4 consecutive quarters; Axon Week deliverables on schedule |
| Run-rate P/S | 10.2x — within reasonable band for 30%+ compounder with this FCB |
| Position concentration policy | Top 5 = 75-85% of book; AXON top-3 by conviction → scale up to ~10-11% |
Verdict per the spec: Add. Drawdown with thesis intact and leading indicators accelerating is the textbook add scenario. Rule of 40: 33.5% growth + 25.5% EBITDA = 58.5%. >55 is the sustained-compounder zone.
| Persona | Action | Read |
|---|---|---|
| Atlas | Refreshed view | Multiple compression, not thesis break |
| Saul | Hold 12.4%, add on further weakness | Thesis intact |
| Bear | Hold 4-5%, add to 7-8% on Q1 confirmation | Wants Q1 FY26 print first (more conservative) |
| Gaucho | Adding LEAPS — fat-pitch setup; target ~17% | Most aggressive — adding on the LEAPS specifically |
| Joe | Hold 7%, add to 9-10% on Q1 3-of-3 | Same gating as Bear |
I sit between Saul/Joe and Gaucho. I'm not waiting for Q1 because the FCB tells me Q1 — $14.4B backlog with 20-25% fulfilment in 12M brackets the FY26 guide. The Q1 risk is not whether revenue prints in line, it's whether GM recovers — and that's an H2 call. I'm not buying the LEAPS at this strike (Gaucho's call) because my existing LEAPS already saturate the optionality bucket. I add equity — lower-risk delta exposure that lets me size back to conviction without re-leveraging the same expiry.
| Metric | Bull (add more) | Base (hold) | Bear (trim equity, not LEAPS) |
|---|---|---|---|
| Revenue YoY | ≥30% | 27-30% | <27% |
| Adj GM | ≥61% | 60-61% | <60% |
| Net new ARR (Q1) | ≥$110M | $90-110M | <$90M |
| FCB | ≥$15B | $14.5-15B | <$14.5B |
| FY26 guide | Raised to ≥30% | Maintained 27-30% | Lowered |
Q1 FY26 historically prints in early May. Three weeks away. I'm sizing the add now because the entry beats waiting for the print, and even bear-case I trim equity (not LEAPS) — manageable.
Thesis: Strengthening. Catalysts delivered (Axon Week). Leading indicators accelerating (FCB +43%, NRR record). Valuation now reasonable (11.7x EV/TTM Rev). The setup that made me cautious in February — 18x run-rate P/S — has resolved. Now it's just a matter of execution on Q1.
-wsm (Long AXON: scaling equity from 3.6% → 7%, holding Jan'28 $440 LEAPS at ~2-3%. Total target ~10-11%.)